How to plan to unlock financial freedom

If you haven’t done so already, now is the ideal time to put a clear plan on how to meet your financial obligations. Independent Newspapers.

If you haven’t done so already, now is the ideal time to put a clear plan on how to meet your financial obligations. Independent Newspapers.

Published Mar 26, 2024


Siyakhe Masiye

THANKFULLY, the first two months of the year have come and gone. Still, in the first quarter, consumers should be in full force working towards a financially fit future. If you haven’t done so already, now is the ideal time to devise a clear plan on how to meet your financial obligations.

Although everyone has a different style of managing money, there are a few principles that have stood the test of time when it comes to laying a foundation for financial security.

These include the importance of consistent saving, maintaining a healthy credit score, and prioritising financial planning. These steadfast principles can all be applied to how people view insurance, how they mitigate risk, and how all these important actions fit into their broader financial plan.

There are three suggested tips for financial planning in 2024 that will help South Africans make better decisions.

Negotiate to save

It’s no secret that many South Africans find it difficult to save and to do so consistently. The current cost-of-living crunch has dramatically reduced people’s disposable income, which has exacerbated the problem.

The important thing to note is that there are many ways to save money. These methods include committing to set money aside at the beginning of each month, minimising expenses by cutting out on non-essential spending, sticking to a strict budget, and limiting impulse buying.

Another method of saving involves dedicating time to reviewing your policies to make sure that you are not over-insured. Over-insurance occurs when you have bought more coverage than you need, which can lead to paying higher premiums than necessary.

This can happen when you purchase insurance policies without fully understanding the coverage you need or when you fail to update your policies as your needs change over time.

Explore the benefits of bundling: Consolidate multiple policies under a single insurer to potentially take advantage of discounts and enjoy reduced premiums. Make securing your future a priority in the coming year.

Keep your credit in the clear

One of the central components of true financial freedom is keeping your credit in check. Not only is it important to avoid becoming over-indebted, but it’s also important to ensure that you can meet your monthly credit repayments and do so consistently to build a positive credit history.

This year, it’s important to revisit your budget and check that your monthly insurance premium can be paid on time and in full. Defaulting on an insurance premium could not only put your finances at risk, but it could also compromise your credit health.

If at any point during the year, it becomes clear that you are at risk of defaulting on your premium, the best thing to do is to proactively contact your insurer, notify them of your financial standing, and reach an agreement.

Remember that what happens in your future in terms of credit is determined by what has happened in your past.

Maintaining a good credit score could have major implications for aspects like access to credit in the future, negotiating interest rates, getting better credit limits, and even employment opportunities.

It is therefore essential to keep your credit score in check and keep your track record clean.

Make financial protection a priority

The final plan is to protect yourself and your dependants from the potentially financially devastating consequences that come with unforeseen tragedies.

Purchasing a home, a vehicle and other valuable possessions, particularly in the current economic climate, is no small feat. For most South Africans, acquiring these high-value assets takes lots of time and hard work.

In the event of damage, destruction or theft, the cost of needing to replace these assets can become an unaffordable financial burden as well as a source of stress and emotional pain.

Insurance, coupled with responsible lifestyle practices and measures to prevent unnecessary loss, provides the most effective safety net against the unforeseen.

When planning and mapping out your financial priorities, it’s important to ensure that proper financial protection makes the list.

* Masiye is a spokesperson at MiWay Insurance.